The proposal would see everyone on a working age payment - which includes those on Newstart and the Disability Support Pension - have 100 per cent of their payments managed by the government. Photo: Virginia Star

As part of the review, it is understood that Mr Forrest has recommended that the government radically expand the current income management system.

This would see everyone on a working age payment - which includes those on Newstart and the Disability Support Pension - have 100 per cent of their payments managed by the government, preventing them from using payments to buy items such as alcohol and cigarettes.

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The recommendation follows the interim report of the McClure welfare review, which last month said that ''consideration should be given to incorporating income management'' in services for job seekers ''who need to stabilise their circumstances''.

On Thursday, a spokeswoman for Prime Minister Tony Abbott said the government had no current plans to expand the income management system to all welfare recipients, pointing out that Mr Forrest's report was only a report to the government.

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When asked on Thursday what he thought about extending income management, Mr Abbott said he wanted to stress that Mr Forrest had produced a "bold and ambitious" report.

"I suspect that some of the things in the report will be testing for public opinion as it currently stands,' he told reporters in Tasmania.

"Some of the things in the report will run well ahead of any plans that the government currently has."

At the moment, more than 20,000 Australians have their incomes managed voluntarily or compulsorily in the Northern Territory, Perth, the Kimberley region and Cape York, with trials also in some local government areas, including Bankstown, Greater Shepparton and Ceduna.

Some welfare recipients have their incomes managed to deal with issues around child protection, financial hardship and drug and alcohol dependency. Other people have their incomes managed simply because they have been on a particular benefit - such as Youth Allowance - for three of the previous six months.

The current schemes, which have been introduced by Coalition and Labor governments, quarantine at least half of a person's payment for necessary items and prevent spending on things such as alcohol, cigarettes, home brew kits and pornography.

It is understood that Mr Forrest is also recommending that banks should be allowed to run an expanded income management scheme, replacing the current BasicsCard system.

Mr Abbott told Fairfax Radio on Thursday that he was happy to look at better technology around income management, noting the system was ''quite administratively cumbersome''.

''Where it is appropriate to have a system of welfare quarantining ... let's try to make it work as smoothly and efficiently as possible''.

Last month, in the wake of the release of the McClure report, welfare groups warned that increasing controls around how people spent their welfare payments could backfire, arguing that existing controls already cost the Commonwealth $1 billion without producing results and stigmatise people on low incomes in the process.